Mint Money Knowledge Center: What is 'fixed income'?

What is fixed incomeAs investors get closer to retirement age, they begin looking for more stable types of investments that will bring in a predictable income. Nothing in investing is guaranteed, but fixed income investments were set up to try and help investors to enjoy some sort of stability in their later years.
 

What Is Fixed Income Investing?

According to Investopedia.com, fixed income investing utilizes what are considered to be the most stable type of investments to bring in a regular income. The return rate on these types of funds is lower than the more aggressive variable rate funds, but investors give up the potential for big returns for the sake of a stable return. For the most part, fixed income funds utilize bonds to help create a regular and stable flow of income.
 

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The Challenges With Fixed Income Investing

According to CNBC.com, investors have been looking for alternatives to bonds to help make fixed income funds a bit more stable. Options such as fixed-index annuities and stocks that have a long history of paying dividends (blue chip stocks) are replacing bonds in fixed income funds.

The problem that investors face with fixed income funds is that the rate of inflation can quickly eat away at earnings and leave the investor with almost nothing. For investors that rely on fixed income funds for their income, exploring more profitable options has become extremely important.
 

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